Capitalization Law and Legal Definition

Capitalization is an accounting method in which anticipated earnings and expenses are classified as capital assets (property, equipment, fixtures) because of the relatively long life of the asset. It also refers to the amount of anticipated net earnings which, in theory, can be counted as capital assets. Capitalization may mean the value of land in relation to the income it produces. Further, it may refer to the sum of the long-term capital of a business, such as stock, bonds, mortgages, and long-term loans and notes, that may be used to purchase assets.